False Advertising

The Lottery needs to stop its shell game.

More than four years after the Indy first peeled the paint off the Colorado Lottery's questionable scratch-game practices, the agency is still selling millions of tickets long after the advertised grand prizes for those games have been awarded (see cover story, page 16).

Even though a lawsuit has been filed to halt the routine, Colorado Lottery officials still insist they are doing nothing wrong -- all the while enacting cosmetic reforms crafted more to protect the Lottery from lawsuits than to inform consumers who pump more than $200 million into its coffers every year.

The Lottery needs to stop its shell game. First, it needs to acknowledge that the slogans it currently employs, such as "Win up to $25,000," are misleading -- especially when no such top prize still exists. Then it needs to follow the lead of some other states and stop the scratch-game prize rip-off.

Just weeks ago, on the heels of another lawsuit alleging violations of consumer protection laws, officials for the California Lottery apologized for selling scratch tickets long after the top prizes were given away and pledged to halt the practice.

Far from following California's example, the Colorado Lottery defends its policies -- while trying to diminish the issues that were first raised by the Independent.

The deceptive practices employed here in Colorado are, sadly, common across the country. In a 1999 national study, Duke University researchers Charles Clotfelter and Philip Cook found that lotteries often employ the following tactics:

Many overemphasize the chance of winning.

Many design games so as to disguise the true odds of winning, lending the impression of a greater possibility of winning.

Many either provide misleading information about the true odds or don't provide any information at all.

Sound familiar?

In addition, the study found that people of color, the undereducated and the poor are among the lotteries' most devoted players. This segment of society also often pays out disproportionally large shares of their income on tickets.

Five percent of all players, they found, purchase more than half of all Lottery tickets, spending, on average, $3,400 per year. The top 10 percent -- who spend $2,250 annually -- account for two-thirds of total ticket sales. African Americans who regularly play the Lottery spend nearly $990 annually on tickets, more than four times the average $210 spent annually by white people.

Following the Duke study, the National Gambling Impact Study Commission, which was charged by Congress to review social and economic implications of gambling, made 70 recommendations to encourage reform among state-sponsored lotteries -- like Colorado's -- that engage in such erroneous and misleading advertising.

Among the recommendations: Federal truth-in-advertising laws should be applied to state Lottery operations. In addition, the committee advised that warnings about the dangers of gambling, as well as the odds of winning, should be prominently posted wherever gambling is permitted.

At the time, gambling commissioner and Focus on the Family President James Dobson stated, "No matter how proponents try to dress it up, governmental lotteries remain shameless in their exploitation of the poor ... and vulnerable."

Dobson is correct. State-funded deception and untruth in advertising crosses ideological lines. Everyone should be incensed when the most vulnerable segment of our society is being duped.

Like all gambling, lotteries are a regressive way to collect taxes, not to mention a bizarre business for the state to be in. But in Colorado and dozens of other states, it is a reality. So what should the Colorado Lottery do to clean up its act?

It should send daily electronic prize updates via the Internet to retailers. The Lottery currently argues that this can't be done because not all retailers have Lotto terminals. This is hardly an insurmountable obstacle in this age of telecommunications. Using a portion of its largesse, the Lottery could install small, inexpensive point-of-purchase terminals that could show prize-status information.

And, if the Lottery really felt like being honest, it could implement the simplest reform of all. On the front of each ticket, it could simply print -- in a size anyone can easily read -- the following message: "Some top prizes may not be available. Please ask your retailer, or call the Lottery, for status on top prizes."

Not a whole lot to ask. But unfortunately, the Colorado Lottery apparently would rather continue to engage in selling false hope.